Revenue, Profit, Total Revenue Flashcards
1
Q
What is total revenue?
A
Price X quantity
2
Q
What is average revenue?
A
Revenue / good
3
Q
What is marginal revenue?
A
Addition to the total revenue of selling an additional unit
4
Q
Why is the revenue graph the flip of cost?
A
productivity (output per worker) is rising so cost per good is falling
5
Q
What is normal profit?
A
The minimum profit a firm must make to stay in business, which is however, insufficient to attract new firms into the market.
6
Q
Where does normal profit occur?
A
AC = AR
7
Q
What is supernormal profit?
A
Profit over and above normal profit. Also known as above normal and abnormal profit
8
Q
What is subnormal profit?
A
Below normal profit
9
Q
What is the role of profit?
A
- Source to innovate I pursue dynamic efficiency
- reward for entrepreneurship
- reward to investors for taking a risk
- allocate resources
